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As stated previously I do follow Wells Fargo research on the brokers and honestly it is surprising how good this stuff has been for 15 years or so. Wells is negative on BWIN, leverage, dilution, and all kinds of other issues, but does indicate free cash flow of $1.46 per share. Currently Wells is most positive on Willis and Aon. They nailed the change as to Willis perfectly and Aon's recent too. I've had Willis for some time but added when Spek began writing about it. Spek sold his but I just kept my added shares plus original ones and the performance so far is crazy good. I already owned Aon and had all I wanted so I just watched that one. I'm as much mystified by Ryan, Goosehead, and some of the others as to valuations. The Erie exchange is something I've greatly profited by but also have little understanding except that the guy I'm probably best friends with (and former business partner) has a business where he sales insurance mostly Erie with about $36mil of sales. So this high school grad only says he gets 3 times sales offers daily, that Erie controls a lot of what he does. But given he took over his dad's one person agency some 45 years ago I don't think he's much complaining.

I enjoy being in business. It is a different view from most, but it is what it is. The ups and downs are something I always predict to come so they just come and go without too much concern for me.

Wells on BRO today: Equity Research Flash Comment — January 27, 2025 Insurance Brokers Brown & Brown, Inc. Q4 Upside Driven by Program; Retail Organic Falls Short Overweight Price Target: $115.00 Our Call BRO reported Q4 core EPS of $0.86, beating our $0.76 and consensus of $0.77 reflecting stronger organic growth and EBITDA margins (most upside driven by Programs; BRO did not say how much flood-related revenue added). Tax benefited results by $0.03. Initial Thoughts Stock call: Shares should trade based on conference call commentary given another weaker organic growth quarter in Retail. Organic had a healthy beat (13.8% vs. our 10.5%) with the upside all driven by National Programs (38.6% vs. our 34.1%). Organic fell slightly short of us in Retail (4.4% vs. our 5.0%) and Wholesale (7.1% vs. our 8.0%). We expect a focus of the call to be on another quarter of slower growth in Retail, any one-offs in Programs, plus the margin guide for 2025. Q4 2024 Variance (Key Metrics) Actual WFS Cons WFS Cons WFS Cons Adjusted EPS $0.86 $0.76 $0.77 12.4% 12.1% Beat Beat Organic Growth 13.8% 10.5% 9.4% 3.3% 4.4% Beat Beat EBITDAC margin 32.9% 31.7% 32.0% 1.2% 1.0% Beat Beat Contingents Commissions 57.0 29.6 29.5 92.4% 93.0% Beat Beat Acquired Revenues 26.0 36.4 35.1 (28.5%) (25.8%) Miss Miss Tax Rate 22.9% 26.5% 26.1% (3.6%) (3.2%) Beat Beat Investment Income 22.0 22.9 19.9 (3.9%) 10.6% Miss Beat Retail Organic Growth 4.4% 5.0% 6.2% (0.6%) (1.8%) Miss Miss National Programs Organic Growth 38.6% 34.1% 21.7% 4.5% 16.9% Beat Beat Wholesale Brokerage Organic Growth 7.1% 8.0% 8.1% (0.9%) (1.0%) Miss Miss Source: Company Reports, Visible Alpha and Wells Fargo Securities, LLC estimates Note: $ in millions except per share and where indicated Variance vs WFS and Consensus Q4 2024 Delta (%) vs Beat / Miss The good: Organic growth of 13.8% came in ahead of our 10.5% and consensus of 9.4%. The upside was driven by National Programs (38.6% vs. our 34.1% and consensus of 21.7%) while both Retail and Wholesale fell short of us. Contingent commissions of $57m, beat our $29.6m and improved from $42m last Q4. EBITDAC margin of 32.9% beat our 31.7% as well as consensus of 32.0%, with most of the upside driven by National Programs (47.9% margin vs our 40.6%); Retail margin also beat at 27.8% vs our 27.4%. The bad: Wholesale organic of 7.1% came in below our 8.0% and consensus of 8.1% and Retail organic of 4.4% was short of our 5.0% and consensus of 6.2%. Growth in Wholesale represented a slowdown from 8.4% in Q3 and 11.0% in the Q2. Retail growth picked up only modestly from 3.9% in the Q3 (which was hurt by ~100 bps from a YTD true-up in certain incentive comp as well as quarterly volatility) and BRO pointed to the Q3 adjusted 4.9% as being a good estimate for Q4. The ugly: In addition to the organic shortfall, Wholesale posted an EBITDAC margin of 25.7%, well short of our 28.5% and down from the 27.1% in the prior Q4. Wholesale margin was offset by the finalizaiton of FY performance incentives and one-time costs. Other detracted from EBITDAC by about -$11m, worse than our estimate for an $8m benefit, as it usually is positive to EBITDAC (through 9/30 other EBITDAC was +$20m YTD). Ticker BRO Upside/(Downside) to Target 6.6% Price (01/27/2025) $107.84 52 Week Range $75.79 - 114.15 Market Cap (MM) $30,627 Source: Company Data, Wells Fargo Securities estimates, and Factset. NA = Not Available, NC = No Change, NE = No Estimate Elyse Greenspan, CFA Equity Analyst | Wells Fargo Securities, LLC Matthew Byrnes, CFA Associate Equity Analyst | Wells Fargo Securities, LLC Hristian Getsov Associate Equity Analyst | Wells Fargo Securities, LLC Nicholas Annitto Associate Equity Analyst | Wells Fargo Securities, LLC Westar Zong Associate Equity Analyst | Wells Fargo Securities, LLC All estimates/forecasts are as of 1/27/2025 unless otherwise stated. 1/27/2025 21:25:54EST. Please see page 5 for rating definitions, important disclosures and required analyst certifications. Wells Fargo Securities, LLC does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of the report and investors should consider this report as only a single factor in making their investment decision. Insurance Brokers Equity Research Additional M&A color: BRO completed 10 deals in Q4, bringing on $137m of revenue (modestly below our $135m estimate) with the largest being the Quintes deal ($110-120m of revenue) which closed in Q4. BRO said pricing and terms for quality deals remained competitive, with no change from prior quarter. Conference call tomorrow at 8:00 AM EST; Webcast here. The biggest focus of the call should be the relative weakness in the Retail and Wholesale segments as well as its outlook for its 2025 margin 2 | Equity Research Brown & Brown, Inc. Equity Research BRO reported Q4 adjusted EPS of $0.86, beating both our $0.76 and consensus of $0.77, reflecting organic upside (driven by Programs), higher contingent commissions, stronger margin, and a lower tax rate. The lower tax rate benefited EPS by $0.03. Organic growth was 13.8%, beating our 10.5% and consensus of 9.5% per Visible Alpha. Organic beat us in National Programs, but missed us in Wholesale and Retail. National Programs organic was 38.6%, beating our 34.1%, and a pickup from 22.8% in Q3 (BRO did not call out the impact of flood servicing revenue in the quarter and had guided to $12-15m). Retail posted organic of 4.4%, short of our 5.0%, and while it improved from 3.95 in Q3 BRO had guided to retail coming in at least at the Q3 adjusted 4.9% (the Q3 had ~100bps of headwind from timing) as increases in net new business were partially offset by the timing of non-recurring business. Wholesale organic of 7.1% was short of our 8.0% estimate and slowed from 8.4% in Q3 due to net new business and exposure unit increases. Acquired revenue added $26m, short of our $36m. The EBITDAC margin was 32.9% (+190 bps Y/Y), above our (31.7%) as well as consensus (32.0%) as National Programs and Retail beat us, while Wholesale missed (Other detracted from EBITDAC by about -$11m, worse than our estimate for an $8m benefit). The tax rate was 22.9%, better than our 26.5% estimate. BRO’s FCF of $341m was higher than our $316m estimate. In the Q4, operating cash flow was 30.5% of revenue, which was higher than its 24-26% 2024 target as Q4 is a high cash generative quarter (operating cash flow was 29.8% of revenue last Q4). Exhibit 1 - BRO's Actuals versus Estimated Results and Prior Year Quarter Results Variance Q4 2024 Q4 2024E % Absolute Q4 2023 % Total revenue $1,184 $1,137 4.2% $47.3 $1,026 15.4% YoY Growth in revenue 15.4% 10.8% - 4.6% 13.8% - Contingents commissions $57.0 $29.6 92.4% $27.4 $42.0 35.7% Investment income $22.0 $22.9 (3.9%) ($0.9) $18.0 NM Acquired revenue $26.0 $36.4 (28.5%) ($10.4) $18.0 NM Annual revenue from completed deals $137.0 $135.0 1.5% $2.0 $109.0 NM Organic revenue $1,078 $1,047 3.0% $31.2 $946 14.0% YoY Growth in organic revenue 13.8% 10.5% - 3.3% 7.7% - Employee comp and benefits as a % of commissions and fees 50.1% 52.7% - (2.6%) 55.1% (4.9%) Other operating expenses as a % of commissions and fees 18.3% 17.1% - 1.2% 15.8% 2.5% Change in acquisition earn out payables $11.0 $0.0 - $11.0 ($9.0) NA Reported EBITDAC margin 32.9% 31.7% - 1.2% 31.0% 1.9% YoY Change in Margin (Deterioration) 1.9% 0.8% - 1.2% (0.4%) - Tax Rate 22.9% 26.5% - (3.6%) 24.4% (1.5%) Cash flow from operations $361.0 $333.3 8.3% $27.7 $305.4 18.2% Capital expenditures $20.0 $17.5 14.3% $2.5 $30.5 (34.4%) Free cash flow $341.0 $315.8 8.0% $25.2 $274.9 24.0% FCF % of Revenue 28.8% 27.8% - 1.0% 26.8% 2.0% Adjusted EPS $0.86 $0.76 12.4% $0.09 $0.69 23.6% YoY Growth in EPS 23.6% 10.1% - 13.6% 15.1% - Segment Results: Retail: Organic revenue YoY growth 4.4% 5.0% - (0.6%) 8.2% (3.8%) Commissions and Fees $619.0 $614.1 0.8% $4.9 $570.0 8.6% Adj EBITDAC margin 27.8% 27.4% - 0.4% 26.8% 1.0% YoY Change in Margin (Deterioration) 1.0% 0.4% - 0.5% NM NM National Programs: Organic revenue YoY growth 38.6% 34.1% - 4.5% 5.4% 33.2% Commissions and Fees $348.0 $331.2 5.1% $16.8 $268.0 29.9% Adj EBITDAC margin 47.9% 40.6% - 7.3% 41.3% 6.7% YoY Change in Margin (Deterioration) 6.7% (2.7%) - 9.4% NM NM Wholesale Brokerage: Organic revenue YoY growth 7.1% 8.0% - (0.9%) 14.5% (7.4%) Commissions and Fees $137.0 $137.8 (0.6%) ($0.8) $126.0 8.7% Adj EBITDAC margin 25.7% 28.5% - (2.8%) 27.1% (1.4%) YoY Change in Margin (Deterioration) (1.4%) 1.3% - (2.7%) NM NM Actual Versus Estimates Year-Over-Year Change Results Variance Source: Company reports and Wells Fargo Securities, LLC estimates Equity Research | 3 Insurance Brokers Equity Research Investment Thesis, Valuation and Risks Brown & Brown, Inc. (BRO) Investment Thesis BRO is looking for margins to improve over 100bps in 2024 and has said they should be able to see low to mid-single digits organic growth in a steady state economy. Brokers should outperform with a more volatile economic backdrop. BRO should outperform relative to the broader brokerage group given its middle-market exposure (seeing best rate increases), combined with its lack of a consulting business. We rate BRO shares Overweight. Target Price Valuation for BRO: $115.00 from NC • Our price target of $115 is based on a 28.0x multiple of our 2025 adjusted cash EPS estimate. • The 28.0x compares to the peer group at 22.2x. The multiple represents and average of the 5-year average and the peak multiple. BRO pulled intangible amortization out of its EPS on its Q4 2023 conference call, so historical levels are not comparable. Given our anticipation for above-average organic and margin expansion, we believe the shares should be valued between recent levels and the peak. Risks to Our Price Target and Rating for BRO Risks include tough economic conditions, which would pressure organic growth, a slowdown and leveling off of the P&C rating improvement, and the completion and successful integration of its recent large international acquisitions. 4 | Equity Research Brown & Brown, Inc. E

Remember not to take me too seriously. But seriously Elon is a positioning genius - best bar none. He's way-way-way ahead of his competition. I'm an outlier basking in the fake news evidently that we went to the moon without an explosion over 55 years ago.

In medieval times when being chased knowing you'd be soon caught - you scampered into the chapel. Elon, not the inventor meme, but the positioning elitist...he's got this down being guv-boy. Look for sanctions against competition everywhere. The new world of the superior US of A! Buy-buy-buy.

To the degree stock price number go up the resulting optimism turbo charges irrational expectations and wild-ass capital allocation. And this theme always registers the hardest within those we consider the brilliant minds of the era. It is nothing new. The circles of technology expertise and superb capital allocation only overlap to a small degree, either by skill or luck. But you can't grasp any of this until the stock prices quit going up. Nothing can be fully rationally discussed or analyzed until prices stop escalating and that particularly includes our tech and crypto worlds of today.

Often thought that a bunch of somebody's lofty rep and stock price would get slaughtered by the Chinese. Not much an acceptable view but mine regardless.

And makes sales of TRUMP non taxable is a given.

In 2018 friends wanted me committed from hearing me chant the 2020 election would not be honored. My attempts these days to get a discussion going about US debt being restructured fail. So my prediction that many productive assets will be temporarily obliterated in price as a source of funds chasing coins probably isn't doable discussion either. And I have a couple more predictions too. LOL till falling on the floor with belly cramps...we are in for some fun in the ole U S of A. Life is great...if you can stand it! A flee from Bitcoin to fund chase of TRUMP?

Dave I know nothing more that what you can read in any analyst report other than personally equating or linking FSLR's size position in its arena and my belief that regardless of tax credits and politics demand is going to be greater than supply. I had bought both FSLR and ENPH a few years ago and made crazy returns but sold. I see FSLR as possibly doing very well. Barron's also just wrote up on FSLR. I built 11 "solar" along with earth sheltered homes years ago (I built 52 custom homes) and have a personal residence 75% powered by solar. So it is an interest I have which further gives me bias.

JOE...maybe FSLR and LHX. A few aren't too short term, longer than most would think.

We were bought out.

None of these are either meaningful nor are they something I'd suggest. But out of sheer boredom in my tax free account in the last two weeks I have bought the following because they were somewhat cheap I think the economy (that's Biden's economy LOL) is far stronger that most wanna admit (and I think interest rates will go up too!!). None except a couple will be long term thangs: SHEL TTE MDT HAL JOE (added) UBER GSK CVX COP FSLR (rebought) AZN SRE (on the fires issue) CWT LHX CWK (added) MSGE NGG C (added) EWBC (added) SLB OXY FMC LYB DOW

As I've posted several times there's been ways to make an incredible amount of money being "associated" with Fairfax through the years regardless of Fairfax's stock price. The Hub insurance brokerage connection is or was the most important wealth builder for me outside of Berkshire and AJ Gallagher and probably the most significant investment I've ever made. It was just as successful as Fairfax has been in the last few years, an incredible literally guaranteed investment - but only in plain sight if you were associated with Fairfax.

There will be millions who feel empowered by the economic gains "entertainment" of others - two mostly - for reasons only a psychologist can interpret. Get on the ride nowadays with DJT and TSLA stocks as the campaign ain't askin'.

I have been a shareholder of Fairfax since 1994. Having Berkshire and Markel plus a mentor who held many of the out-of-the mainstream stocks was my ticket, it certainly wasn't some grand expertise or early recognition of greatness of Prem - although he was considered special. It was a culture I particpated within, a unique fun place to interact and invest. Although I was in the insurance business, most in that business had little knowledge of Fairfax, it was Marshall Johnson from McDaniel Lewis in Greensboro...his making a market for small insurance co's and banks and the links he had that awakened me. I checked my online and I added to Fairfax 27 times both on its journey down and up in the last few years. And finally, much to my surprise, Fairfax is now my 4th largest holding behind AJG, Berkshire, and Meta. I added enough although not near enough to both Meta and Fairfax to make a difference. That's something I probably would have done but not nearly to the extent I did which was fueled by participating on COBF. As I've often mentioned, knowing who to follow is my best skill, a thing I think most investors far under-rate as something that can, if you are programmed like me, greatly affect investment performance.

Sold Blue Owl today. I can't remember the discussion we had here a couple of years ago and who was a part of it, but it turned out wildly successful as we all bought around $10 per share and out at $24-ish. I sold APO but will retain BX because of insane gains the tax man, same less so with BN and BAM. I think these asset managers are wildly popular...too popular. It doesn't always go well for them especially with exponential gains so quickly. At least to me that's the case. Wasn't long ago that these guys were very unpopular.

As far as tops are concerned, as we watch the major beer/wine/spirits makers stocks plummet, I've had a view for some time that I think we now see: A major wipe-out of craft breweries. A few will survive of course.

Yes.

I simply find those that use Berkshire/Buffett/Munger for self-gain to be blandly down on the lowest of any possible level ----- simply incredibly annoying. But so many obviously first class people feel strong connections to these guys and enjoy doing so. I think it is probably related to personality types. LOL! Life is great...if you can stand it!

Berkshire and AJG are 4/5ths of my stuff; Lowes, Norfolk Southern, Erie, Brookfield(s), Brown and Brown, Mondelez, Coke, Pepsi, Markel and Fairfax take me well over 90%. I'm guessing I'm up a bit over 20% this year. I bought Erie after 1994, added some to Fairfax a few times in recent years, messed with Brookfield, and bought Cadbury (eventually Mondelez) in 2000. Other than that no significant portfolio changes since 1994. Lowe's, Fairfax, and the brokers began in the 1993-94 period; Coke and Pepsi go back to 1975. Markel began at the IPO 1987 or 88- can't remember, family worked there and the desire to buy was widespread among those who were knowledgeable financially. Norfolk Southern was a 1/27th (27 grandchildren, me the youngest) of grandmother's inheritance linked to the family's North Carolina Railroad stock. Much bigger railroad today. I held North Carolina Railroad for years until the State of NC bought us minority shareholders out at a bargain to continue the el-cheapo lease to Norfolk. I think business, not stocks. Hate trends and hot sectors...although I have owned Google for some (guessing) 12-15 years...can't remember. Sold MSFT to buy land. And I do now trade some in my 401K! (Which I love doing!) Probably wrote something in error, but I do that constantly and can't figure out how to do better. Oh...by the way, of the stocks I've bought related to the posters I follow here on COBF (their rants...not mine!)? I think I'm doing about 35% annual a year with those! .

Reciprocity...one of Cialdini's 7 for a reason.

I just watched a video of Michael Saylor saying he will be buying Bitcoin at "one million and then probably at one billion." So 21,000,000 times 1,000,000,000 is $21,000,000,000,000,000. Yep 21 quadrillion I think...fifteen zeros. There is a lot of wealth coming to Bitcoin holders! What will happen with all of that wealth?

Since I'm out on the limb this morning... What businesses are most at risk? My view is that while AI is absolutely as meaningful as "we" think it is, the capital mis-allocation towards dealing with it will inevitably prove unsustainable. So in my view the businesses getting sales and profits from AI spending are the most at risk of losing market cap over time, no matter what the growth of those businesses is today. Doesn't mean they won't stay in business and stay profitable, but Intel, Cisco, EMC, etc were....well, Intel, Cisco, EMC.....

The "time" thing Spooky gets hard, really hard. An example I've mentioned is Abbey Joseph Cohen and her incredible status that really got started in the mid the late 1990's. Even when she began her crusade of big cap promotions these stocks were (based on the outcome...any time period after 2001 - it matters little as they all prove it) over-valued. Not over-valued for that time period, but over valued even considering their prices decades later. Yet the parade she led kept on for years and she still had her reputation - despite the outcome - all the way up until 2008. What popular "analysts" today are wrong? Well, you don't know yet.